Author Archive | Matt Shanahan

The Link Between Customer Success and CFO Happiness: It’s All About Gross Margin

If you’re a CFO of a SaaS business, one of your biggest challenges is gross margin. As we all know, gross margin is essentially the difference between the revenue for a subscription and the cost of fulfilling that subscription—and with the software industry’s seismic shift from an on-premises model to a SaaS model, we’ve watched gross margins go from about 99% to more like 70 to 80%. That’s a big change. Unlike the old on-premises model, the SaaS model now has operations, customer service, and other functions to include in the gross margin equation. A SaaS company needs to fulfill on the terms of subscriptions, and that entails both “assets” (e.g., computers, bandwidth, operations) and “services” (e.g., on-boarding, adoption, retention). The good news? […]

The Data Behind Customer Success and Marketing

You might not normally consider customer success when you’re thinking about marketing—but in the subscription economy, customer success can be critical to making marketing campaigns more effective. Why? The short answer is that customer success data can help you lower your cost per lead and increase your number of opportunities—and we’ve watched as one company has used customer success data to grow its closed opportunities by 2,400%. More on that example shortly, but first let’s examine the theory behind the data: In the subscription economy, sustained growth is not based on customer acquisition—it’s based on maximizing customer lifetime value. This means that to grow, you must effectively market up-sells and cross-sells to the right customers at the right time. This is where customer […]

Customer Success + Exception Management = Revenue and Profit

There are many reasons to have a “standard” process for customer on-boarding, adoption, renewal, and the other phases of the customer lifecycle. But the truth is that every customer and user is unique—and if you’re only following a standardized process, you’re leaving revenue and profit on the table. The best approach is to define a standardized process for these phases, but then to proactively monitor and manage exceptions. What is exception management? It is the process of identifying predictive triggers that signal when a customer is off-track from a successful customer journey and then proactively engaging that customer to bring them back on track. We’ve seen with our own customers how managing exceptions can have a direct, measurable impact on revenue and […]

The Data Behind Adoption and Retention in the Customer Journey

In the last research alert, we talked about the “90/10 Rule of Adoption.” That was an observation based on our own real-world data which shows that after 90 days, a non-loyal user has only a ten percent chance of becoming a loyal user. Like the time-honored 80/20 rule, our 90/10 rule is meant as a guide for setting priorities—and the key takeaway is that adoption is critical to the customer journey. The 90/10 rule of adoption encourages companies to better understand the dynamics of customer adoption, because adoption is often highly correlated with customer retention and renewal revenue. This correlation between adoption and retention makes intuitive sense: Customers only want to pay for what they actually use, so if adoption […]